Geithner: "[For A Lot of People] It's Going to Feel Very Hard, Harder than Anything They've Experienced in Their Lifetime Now, For a Long Time to Come"

AP notes:

Many Americans will face hard times for a long time to come.

***

Geithner says will be some time before many people feel like the country is recovering.

Geithner tells NBC's "Meet the Press" that it's a very tough economy. He says that for a lot of people "it's going to feel very hard, harder than anything they've experienced in their lifetime now, for a long time to come."

Of course, Geithner is a large part of the reason that it will be so hard.

As I pointed out in May:

Geithner has been a big part of the problem.

He's previously said that his job as head of the New York Fed wasn't as a regulator, even though one of the Fed's core jobs is to regulate. As Dylan Ratigan writes:

In Geithner's own words during confirmation hearings in March: "First of all, I've never been a regulator...I'm not a regulator." According to the New York fed bank's Web site, that was your job!!

Quoting from the Fed's website: "As part of our core mission, we supervise and regulate financial institutions in the Second District." That district of course is the epicenter for bailed out banks and billion dollar bonuses.

***

Indeed, as I've previously noted:

Tim Geithner told the Today Show that:

It's "deeply unfair" that some financial institutions that got taxpayer-paid bailouts are emerging in better shape from the recession than millions of ordinary Americans.

Geithner also argued that President Barack Obama had no choice when confronted with a financial crisis.

"As the president has said, we had to do some very unpopular things," Geithner said. "People looked at what had happened."

"It's not fair. It's deeply unfair," he said. "He (Obama) had to decide whether he was going to act to fix it or stand back ... and that would have been calamitous for the American economy."

There are only a couple of minor inaccuracies in Geithner's statements:

* The government hasn't done anything to fix the economy

* Geithner's entire approach is wrong, because the economy can't recover until many of the "financial institutions that got taxpayer-paid bailouts [and] are emerging in better shape" are broken up

* The government has been anemic in addressing unemployment

Moreover, it is not like their approach fell on them and they couldn't do anything about it. Geithner ... and the boys made a conscious decision to side with the oligarchy at the expense of the people.

As Simon Johnson and James Kwak write:

[There was a] point at which the government had to decide if it would defend the financial oligarchy from populist outrage, or whether it would reform the financial system that brought us the financial crisis and severe recession. We do not think it was an easy choice. But ultimately Obama and his advisers chose to bet on the bankers they knew. The result has been even larger banks and an even more concentrated financial sector.

***

Geithner ended the interview with this pearl of wisdom:

"What happened in our country should never happen again," he said. "People were paid for taking enormous risks. It was a crazy way to run a financial system." Geithner said, "It's the government's job ... to do a better job of restraining that kind of risk-taking."

Indeed ... too bad that Geithner and the boys are still encouraging that kind of risk-taking.

Geithner was, of course, largely responsible for much of the failure of the government to restrain risk-taking in the first place.

As William Black points out:

Mr. Geithner, as President of the Federal Reserve Bank of New York since October 2003, was one of those senior regulators who failed to take any effective regulatory action to prevent the crisis, but instead covered up its depth.

Geithner was also complicit in Lehman's accounting fraud [and see this].

And pushed to pay AIG's CDS counterparties at full value, and then to keep the deal secret.

And as Robert Reich notes today, Geithner was "very much in the center of the action" regarding the secret bail out of Bear Stearns without Congressional approval.

([G]eithner and his buddies helped blow the bubble and try to cover up wrongdoing on Wall Street.)
Geithner has been equally bad as Treasury boss. Indeed, there is hardly a single independent economist who thinks he has been responding appropriately to the economic crisis.

Sorry to say, but Geithner has long been a yes-man to the powers-that-be, who ships pallets of money wherever he is told without question or any follow-up or tracking whatsoever.

Even worse, Geithner has been called an idiot by Nassim Taleb and a "con man" by Time Magazine.

***

And because Geithner (along with Bernanke) have insisted that the big banks be bailed out at Main Street's expense, that the status quo be protected instead of reformed, and that the U.S. insure the debts of the too big to fails, the next crisis will be even bigger than the last.

Of Course Unemployment Is Rising ... Government Policy Is GUARANTEEING It

As many writers have reported, the latest jobs report is dismal.

In fact, as I have demonstrated, unemployment may rival the Great Depression.

These bad numbers caught many by surprise. But as I repeatedly noted, government policy guarantees rising unemployment.

For example, I wrote last September:

I predicted a growing, long-term unemployment problem last year.

***

In fact, as demonstrated below, the government's actions have directly contributed to the rising tide of unemployment.

The Government Has Encouraged the Offshoring of American Jobs for More Than 50 Years

President Eisenhower re-wrote the tax laws so that they would favor investment abroad. President Kennedy railed against tax provisions that "consistently favor United States private investment abroad compared with investment in our own economy", but nothing has changed under either Democratic or Republican administrations.

For the last 50-plus years, the tax benefits to American companies making things abroad has encouraged jobs to move out of the U.S.

Actually, many American companies are — just maybe not in your town. They're hiring overseas, where sales are surging and the pipeline of orders is fat.

***

The trend helps explain why unemployment remains high in the United States, edging up to 9.8% last month, even though companies are performing well: All but 4% of the top 500 U.S. corporations reported profits this year, and the stock market is close to its highest point since the 2008 financial meltdown.

But the jobs are going elsewhere. The Economic Policy Institute, a Washington think tank, says American companies have created 1.4 million jobs overseas this year, compared with less than 1 million in the U.S. The additional 1.4 million jobs would have lowered the U.S. unemployment rate to 8.9%, says Robert Scott, the institute's senior international economist.

"There's a huge difference between what is good for American companies versus what is good for the American economy," says Scott.
***

Many of the products being made overseas aren't coming back to the United States. Demand has grown dramatically this year in emerging markets like India, China and Brazil.

Most of the Emergency Money Went Abroad

In addition, a large percentage of the bailouts went to foreign banks (and see this). And so did most of money from the second round of quantitative easing.

That's not going to help the American worker.

Continuing on with my post from last September:

The Government Has Encouraged Mergers

The government has actively encouraged mergers, which destroy jobs.

For example, the Treasury Department encouraged banks to use the bailout money to buy their competitors, and pushed through an amendment to the tax laws which rewards mergers in the banking industry.

This is nothing new.

Citigroup's former chief executive says that when Citigroup was formed in 1998 out of the merger of banking and insurance giants, Alan Greenspan told him, “I have nothing against size. It doesn’t bother me at all”.

And the government has actively encouraged the big banks to grow into mega-banks.

The Government Has Let Unemployment Rise in an Attempt to Fight Inflation

As I noted last year:

The Federal Reserve is mandated by law to maximize employment. The relevant statute states:

The Board of Governors of the Federal Reserve System and the Federal Open Market Committee shall maintain long run growth of the monetary and credit aggregates commensurate with the economy's long run potential to increase production, so as to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates.

***

The Fed could have stemmed the unemployment crisis by demanding that banks lend more as a condition to the various government assistance programs, but Mr. Bernanke failed to do so.

Ryan Grim argues that the Fed might have broken the law by letting unemployment rise in order to keep inflation low:

The Fed is mandated by law to maximize employment, but focuses on inflation -- and "expected inflation" -- at the expense of job creation. At its most recent meeting, board members bluntly stated that they feared banks might increase lending, which they worried could lead to inflation.

Board members expressed concern "that banks might seek to reduce appreciably their excess reserves as the economy improves by purchasing securities or by easing credit standards and expanding their lending substantially. Such a development, if not offset by Federal Reserve actions, could give additional impetus to spending and, potentially, to actual and expected inflation." That summary was spotted by Naked Capitalism and is included in a summary of the minutes of the most recent meeting...

Suffering high unemployment in order to keep inflation low cuts against the Fed's legal mandate. Or, to put it more bluntly, it may be illegal.

In fact, [many] leading economists say that - under Mr. Bernanke's leadership - America is suffering a permanent destruction of jobs.

[We've had a] permanent destruction of hundreds of thousands of jobs in industries from housing to finance.

The chief economists for Wells Fargo Securities, John Silvia, says:

Companies “really have diminished their willingness to hire labor for any production level,” Silvia said. “It’s really a strategic change,” where companies will be keeping fewer employees for any particular level of sales, in good times and bad, he said.

And former Merrill Lynch chief economist David Rosenberg writes:

The number of people not on temporary layoff surged 220,000 in August and the level continues to reach new highs, now at 8.1 million. This accounts for 53.9% of the unemployed — again a record high — and this is a proxy for permanent job loss, in other words, these jobs are not coming back. Against that backdrop, the number of people who have been looking for a job for at least six months with no success rose a further half-percent in August, to stand at 5 million — the long-term unemployed now represent a record 33% of the total pool of joblessness.

And see this.

In fact, the Fed intentionally curbed lending by banks in an attempt to stem inflation, [and see this] without addressing whether public banks could provide credit.

The Government Has Allowed Wealth to be Concentrated in Fewer and Fewer Hands

... FDR’s Fed chairman Marriner S. Eccles explained:

As in a poker game where the chips were concentrated in fewer and fewer hands, the other fellows could stay in the game only by borrowing. When their credit ran out, the game stopped.

***

When most people lose their poker chips - and the game is set up so that only those with the most chips get more - free market capitalism is destroyed, as the "too big to fails" crowd out everyone else.
And the economy as a whole is destroyed. Remember, consumer spending accounts for the lion's share of economic activity. If most consumers are out of chips, the economy slumps.

And unemployment soars.

As former Secretary of Labor Robert Reich wrote yesterday:

Where have all the economic gains gone? Mostly to the top.

***

It’s no coincidence that the last time income was this concentrated was in 1928. I do not mean to suggest that such astonishing consolidations of income at the top directly cause sharp economic declines. The connection is more subtle.

The rich spend a much smaller proportion of their incomes than the rest of us. So when they get a disproportionate share of total income, the economy is robbed of the demand it needs to keep growing and creating jobs.

What’s more, the rich don’t necessarily invest their earnings and savings in the American economy; they send them anywhere around the globe where they’ll summon the highest returns — sometimes that’s here, but often it’s the Cayman Islands, China or elsewhere. The rich also put their money into assets most likely to attract other big investors (commodities, stocks, dot-coms or real estate), which can become wildly inflated as a result.

***

THE Great Depression and its aftermath demonstrate that there is only one way back to full recovery: through more widely shared prosperity.

***

And as America’s middle class shared more of the economy’s gains, it was able to buy more of the goods and services the economy could provide. The result: rapid growth and more jobs. By contrast, little has been done since 2008 to widen the circle of prosperity.

And see Wednesday's extensive post on government policy increasing inequality.

The Rich Love Unemployment

As Mark Provost has pointed out - the rich love high unemployment.

Because all branches of government and the Federal Reserve are wholly captured by the top .1% (and see this, this and this), they are not very motivated to decrease unemployment.

Indeed, the government has made it official policy to protect the fat cats instead of helping the little guy.

Not "More Stimulus" Versus "Debt Reduction" - But Policy for the Wealthiest Versus Policy for the People

As I noted in December, Keynesians who think more stimulus will fix everything and conservatives who think that cutting the debt will solve our problems are both painting with too broad a brush:

I am not really pro- or anti- any school of economics ... I am simply for doing what will work and against doing what won't work.

As I pointed out on August 11th:

"Deficit doves" - i.e. Keynesians like Paul Krugman - say that unless we spend much more on stimulus, we'll slide into a depression. And yet the government isn't spending money on the types of stimulus that will have the most bang for the buck: like giving money to the states, extending unemployment benefits or buying more food stamps - let alone rebuilding America's manufacturing base. See this, this and this. [Indeed, as Steve Keen demonstrated last year, it is the American citizen who needs stimulus, not the big banks.]

***

Keynes implemented his New Deal stimulus at the same time that Glass-Steagall and many other measures were implemented to plug the holes in a corrupt financial system. The gaming of the financial system was decreased somewhat, the amount of funny business which the powers-that-be could engage in was reined in to some extent.

As such, the economy had a chance to recover (even with the massive stimulus of World War II, unless some basic level of trust had been restored in the economy, the economy would not have recovered).

Today, however, Bernanke, Summers, Dodd, Frank and the rest of the boys haven't fixed any of the major structural defects in the economy. So even if Keynesianism were the answer, it cannot work without the implementation of structural reforms to the financial system.

A little extra water in the plumbing can't fix pipes that have been corroded and are thoroughly rotten. The government hasn't even tried to replace the leaking sections of pipe in our economy.

In truth and in fact, the government's policies are not only not working to stem the rising tide of unemployment, they are making it worse.

Forget the whole "Keynesian" versus "deficit hawk" debate. The real debate is between good and bad policy.

The following articles provide details:

* Government Policy Caused America's Unemployment Crisis

* The Fed Is Saying One Thing But Doing Something Very Different

* The Rising Tide of Unemployment in America: How Bad Will It Get, And What Can We Do?

* Even Greenspan Admits that Moral Hazard and Fraud are the Main Problems

* Another Nobel Economist Says We Have to Prosecute Fraud Or Else the Economy Won't Recover

It really upsets me that the tax-dodger has the audacity to even speak on such matters.

The Mad Crapper

07-11-2011, 02:18 PM

It really upsets me that the tax-dodger has the audacity to even speak on such matters.

No doubt. The piece of shit should be in jail. amnorix, banyon and orange want to toss his salad.

BigChiefFan

07-11-2011, 02:26 PM

No doubt. The piece of shit should be in jail. amnorix, banyon and orange want to toss his salad. There's quite a few "officials" that have hijacked our country for their selfish greed. We need to stand together as the little guy and put pressure on those that represent their own personal agendas. We aren't being represented and the majority of our tax dollars go to line someone's else's pockets, then actually serving the greater good, like through public schools, fire, etc...

KILLER_CLOWN

07-11-2011, 04:17 PM

The Big Banks Are Waging Warfare Against the People of the World

Michael Hudson is a highly-regarded economist. He is a Distinguished Research Professor at the University of Missouri, Kansas City, who has advised the U.S., Canadian, Mexican and Latvian governments as well as the United Nations Institute for Training and Research. He is a former Wall Street economist at Chase Manhattan Bank who also helped establish the world’s first sovereign debt fund.
Hudson says:

As I documented last month in a post entitled "America Is Being Raped ... Just Like Greece and Other Countries", America is in fact being subjected to the same type of plundering as Greece and Ireland.

Professor Hudson explained in 2008:

You have to realize that what they’re trying to do is to roll back the Enlightenment, roll back the moral philosophy and social values of classical political economy and its culmination in Progressive Era legislation, as well as the New Deal institutions. They’re not trying to make the economy more equal, and they’re not trying to share power. Their greed is (as Aristotle noted) infinite. So what you find to be a violation of traditional values is a re-assertion of pre-industrial, feudal values. The economy is being set back on the road to debt peonage. The Road to Serfdom is not government sponsorship of economic progress and rising living standards, it’s the dismantling of government, the dissolution of regulatory agencies, to create a new feudal-type elite.

I reported last year:

Foreign Policy magazine ran an article entitled "The Next Big Thing: Neomedievalism", arguing that the power of nations is declining, and being replaced by corporations, wealthy individuals, the sovereign wealth funds of monarchs, and city-regions.

As I noted in 2009, a leading progressive economist that the true purpose of the bank rescue plans is "a massive redistribution of wealth to the bank shareholders and their top executives".

As the wholly non-partisan Australian economist Steve Keen notes:

* "This is the biggest transfer of wealth in history", as the giant banks have handed their toxic debts from fraudulent activities to the countries and their people

* The big banks blew bubbles - using fraud - because that's the only way they could make obscene profits (see this for for details)

Indeed, this isn't the "Great Recession", it's the Great Bank Robbery. The big banks have pillaged and looted the rest of the world.

And it is not only Greece which is losing its sovereignty ... the big banks have turned America into a banana republic as well. Remember, the trillions in bailouts went to banks, not Main Street ... and a large percentage of the bailouts went to foreign banks (and see this). And so did most of money from the second round of quantitative easing.

Indeed, the warfare by the big banks is global.

Postscript: If this sounds like breathless class warfare against the financial sector, remember:

* Inequality largely caused the Great Depression and the current economic crisis

* The father of modern economics - Adam Smith - didn't believe that inequality should be a taboo subject

* Warren Buffet, one of America's most successful capitalists and defenders of capitalism, points out:

There's class warfare, all right, but it's my class, the rich class, that's making war ....

* Conservatives - as well as liberals - are against rampant inequality. But all Americans underestimate the amount of inequality in our country

Russian Prime Minister Vladimir Putin accused the US of hooliganism on Monday over the US government's efforts to ease its financial problems by injecting hundreds of billions of dollars into the economy.

"Thank God, or unfortunately, we do not print a reserve currency but what are they doing? They are behaving like hooligans, switching on the printing press and tossing them around the whole world, forgetting their main obligations," Putin told a meeting of economic experts at the Russian Academy of Sciences.

Putin's comments came in the wake of the completion of the US' quantitative easing (QE) 2 program on June 30, in which the Federal Reserve bought $600 billion worth of its Treasury bonds. The Fed's first round of QE, which ended in March last year, amounted to less than half the size of QE2.

The Russian authorities have said they would like to see a basket of currencies including the ruble replacing the dollar as the main reserve currency, although most analysts have said a more realistic target for Russia would be if the ruble became a regional reserve currency for the CIS.

http://en.rian.ru/russia/20110711/165137466.html

Jaric

07-11-2011, 05:17 PM

Russia

Putin brands US as 'hooligans' for printing money

Russian Prime Minister Vladimir Putin accused the US of hooliganism on Monday over the US government's efforts to ease its financial problems by injecting hundreds of billions of dollars into the economy.

"Thank God, or unfortunately, we do not print a reserve currency but what are they doing? They are behaving like hooligans, switching on the printing press and tossing them around the whole world, forgetting their main obligations," Putin told a meeting of economic experts at the Russian Academy of Sciences.

Putin's comments came in the wake of the completion of the US' quantitative easing (QE) 2 program on June 30, in which the Federal Reserve bought $600 billion worth of its Treasury bonds. The Fed's first round of QE, which ended in March last year, amounted to less than half the size of QE2.

The Russian authorities have said they would like to see a basket of currencies including the ruble replacing the dollar as the main reserve currency, although most analysts have said a more realistic target for Russia would be if the ruble became a regional reserve currency for the CIS.

http://en.rian.ru/russia/20110711/165137466.html

Isn't Vladimir Putin being the voice of reason one of the signs the end is near?

Where are those Christians i was taunting in that other thread? I need answers?!?!

boogblaster

07-12-2011, 01:40 PM

we're screwed .. ima screwed .. im on disability and afraid its bout to end .. guess ill have to rob the rich ..........

mlyonsd

07-12-2011, 02:16 PM

Watched this interview. Geithner seemed very very worried. Maybe even scared. Probably because his name is attached the mess we're in.

BucEyedPea

07-12-2011, 02:21 PM

Watched this interview. Geithner seemed very very worried. Maybe even scared. Probably because his name is attached the mess we're in.

He should feel a Very Hard, Harder than Anything blade on his neck as a member of the privileged class. :p

BucEyedPea

07-12-2011, 02:23 PM

It really upsets me that the tax-dodger has the audacity to even speak on such matters.

He needs to build himself a bunker for himself, Obama and his cronies. ( that includes Paulson)

KILLER_CLOWN

07-12-2011, 02:36 PM

He needs to build himself a bunker for himself, Obama and his cronies. ( that includes Paulson)

Is there enough room for the Chertoff and the rest of the Bush cronies in there too? We need something large enough to house all members of the Tourism Suppression Agency.